Section 506

Medicaid Funds

506.01

Dependency and Medicaid Transition Reserve

Requirements

You must analyze the EGIEGIOn an annual basis or any specified period, the total of Net Rental Income plus other income per Part II, Chapter 2: Valuation and Income, Section 203: Income Analysis and the applicable products and features in Part III. to determine the percentage derived from payments under a Medicaid provider agreement with a government authority or managed care organization (Medicaid FundsMedicaid FundsFunds paid to a provider by governmental authorities or managed care organizations, under Medicaid provider agreements. ).

Operating Procedures

If more than 20% of the EGIEGIOn an annual basis or any specified period, the total of Net Rental Income plus other income per Part II, Chapter 2: Valuation and Income, Section 203: Income Analysis and the applicable products and features in Part III. is derived from Medicaid FundsMedicaid FundsFunds paid to a provider by governmental authorities or managed care organizations, under Medicaid provider agreements. , Fannie Mae may require that you

  • establish a Medicaid transition reserve account, and/or
  • enter into an account control agreement with the BorrowerBorrowerPerson who is the obligor per the Note. .

If Fannie Mae requires a Medicaid transition reserve, you must:

  • determine the appropriate amount of the reserve by considering the
    • reimbursement rates of the government authority or managed care organization, and
    • percentage of Medicaid-supported residents at the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). ;
  • ensure that the BorrowerBorrowerPerson who is the obligor per the Note. sufficiently funds the reserve; and
  • use the Modifications to Multifamily Loan and Security Agreement (Medicaid Transition Reserve) (Form 6237.SRS) and Modifications to Multifamily Loan and Security Agreement – Addenda to Schedule 2 – Summary of Loan Terms (Medicaid Transition Reserve) (Form 6102.21.SRS).

If Fannie Mae requires an account control agreement, you must

  • require the BorrowerBorrowerPerson who is the obligor per the Note. to deposit the Medicaid FundsMedicaid FundsFunds paid to a provider by governmental authorities or managed care organizations, under Medicaid provider agreements. into a controlled account,
  • include in the agreement an acknowledgement of Fannie Mae’s first LienLienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. on, and control over, the Medicaid FundsMedicaid FundsFunds paid to a provider by governmental authorities or managed care organizations, under Medicaid provider agreements. , and
  • obtain Fannie Mae's approval if you elect not to use Fannie Mae's form.
506.02

State Medicaid

Requirements

The PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). must be located in a state that has a

  • Medicaid waiver in place, or
  • Medicaid plan that allows for the payment of services and housing costs from Medicaid FundsMedicaid FundsFunds paid to a provider by governmental authorities or managed care organizations, under Medicaid provider agreements. .

You must document the Medicaid waiver or plan and demonstrate that it allows for the payment of services performed, and housing costs incurred, at the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). .